This Morning: Yahoo!, Intel Rising, Still No Home for Google Glass, Apple’s Quarter

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Yahoo! (YHOO) are up $1.90, or almost 6%, at $36.09, holding onto most of last night’s after-hours gains, after the company beat revenue and earnings per share expectations for Q1, and forecast revenue this quarter in line with expectations, and disclosed a revenue increase for Alibaba Group Holding, in which it has a 24% stake, that was well above what some were expecting.

There are two ratings change this morning, that I can see, from Wells Fargo’s Peter Stabler, who raised the stock to Outperform from Market Perform, and raised his valuation range to $45 to $47 from a prior $38 to $40, based on a higher valuation for the Alibaba stake, and also from Gabelli & Co.’s Brett Harris, to Buy from Hold.

Speaking of Alibaba, a filing for an IPO in the U.S. could come as soon as next week, according to an item this morning from Reuters, citing multiple unnamed sources.

There is one ratings change this morning, as far as I can tell, a downgrade by B. Riley & Co.’s Craig Ellis from Buy to Neutral because of what Ellis sees as a lack of catalysts. Elsewhere, though, price targets are rising. Christopher Rolland with FBR & Co. reiterated an Outperform rating on the shares, and raised his price target to $30 from $27, writing that “We are increasingly confident that Intel can opportunistically extract value from the extra transistors afforded to it through the best silicon manufacturing operations in the world.”

However, he adds that there are things to nitpick about: server revenue “got off to a muted start,” and the stock has already “strongly outperformed during what has been a challenging tech tape,” hence, “shares may digest some of this elevated sentiment in today’s trading, modestly capping upside.”

Even skeptics were raising targets: Stephen Chin of UBS reiterated a Neutral rating on the shares, and raised his price target to $28 from $24, writing “but we still view Intel’s new products in mobility as a ‘show me’ story with 5M tablet chips shipped in 1Q14 a good start toward achieving its 40M.”

Speaking of chips, shares of semiconductor equipment maker ASML Holding (ASML) are down $4.21, or almost 5%, at $80.93, after the company this morning reportedQ1 revenue of €1.4 billion, just slightly missing the average €1.42 billion consensus, and profit of €0.57 per share, above the average €0.53-cent estimate, but also forecast revenue this quarter of €1.6 billion, below consensus for €1.69 billion.

More worrying, the company’s bookings number was €1.07 billion, which Credit Suisse’s John Pitzer notes was well below the consensus for €1.64 billion. The company, writes Pitzer, is “pushing out longer term targets” for its “extreme ultra violet” lithography systems, and “without the success of EUV, ASML has limited earnings growth potential.”

Topeka Capital Markets’s Victor Anthony today reiterates a Buy rating on Google (GOOG), which is set to report results this afternoon, after the closing bell. Anthony’s focus, however, is yesterday’s one-day sale on Google Glass, the smart eyeglass device that had been in limited beta testing with selected “explorers” chosen by Google, but was temporarily thrown open to public orders.

Anthony writes that after testing the device “the past several weeks,” he is pleased with the functionality, but its mainstream appeal remains limited. “While the enterprise use case is growing, we are unconvinced that consumer demand will be sufficient to drive the product to scale and mainstream status like the iPad.”

Speaking of Google, The Wall Street Journal’s Digits’s Alistair Barrlate yesterday offered a brief item on the company’s “Project Ara,” which is aimed at creating a “modular” smartphone. Barr cites some interesting examples from engineers outside of Google who are coming up with parts that could be sold in the after-market to add capabilities such as blood detection and other particular functions.

Note that Pacific Crest analysts Weston Twigg, John Vinh and Michael Bowen today penned a think piece about Project Ara last week, calling it something that could “significantly expand market control of Android.”

Shares of Apple (AAPL) are down $3.01, or half a percent, at $514.95, as the Street continues to debate the fiscal Q2 earnings report a week from today. Pacific Crest’s Andy Hargreaves reiterates an Outperform rating on the shares, and a $635 price target, writing that “Our demand and supply checks through FQ2 (March) suggested relatively strong iPhone sales” in the quarter, and so the com pay should be able to deliver upside.

But another bull on the stock, Toni Sacconaghi of Bernstein Research, who has an Overweight rating, and a $575 price target, today writes that there is more downside risk than upside opportunity in both this report and the June report.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.